Stocks fell for a fourth day on Friday on persistent worries about the U.S. budget deficit, with U.S. Treasuries and the dollar losing ground.
Shares of big manufacturers such as Caterpillar Inc
However, multinationals and commodity companies limited the major U.S. stock indexes' losses as investors bought stocks in sectors that could benefit from the weaker dollar, while energy shares climbed on bets overseas demand would support energy prices.
Shares of gold producer Newmont Mining Corp
Gold, a traditional safe haven, hit a fresh two-month high, rising above $960 an ounce for the first time since late March, while the Chicago Board Options Exchange Volatility Index <.VIX>, also known as Wall Street's fear gauge, climbed 4.1 percent and remained well above 30, a key psychological level, according to analysts.
Investors are coming to a realization that interest rates are heading higher and the dollar is going to be under pressure, said Alan Lancz, president of Alan B. Lancz & Associates Inc, an investment advisory firm based in Toledo, Ohio.
Energy is moving as China continues to stockpile and buy all the commodities they can. I think you have that play of a weaker dollar and stronger commodities right now. Multinationals are going to be big plays -- anybody doing anything overseas will attract attention, he added.
The Dow Jones industrial average <.DJI> dropped 14.81 points, or 0.18 percent, to 8,277.32. The Standard & Poor's 500 Index <.SPX> fell 1.33 points, or 0.15 percent, to 887.00. The Nasdaq Composite Index <.IXIC> lost 3.24 points, or 0.19 percent, to 1,692.01.
INDEXES FINISH WEEK WITH GAINS
For the week, though, stocks finished moderately higher, with the blue-chip Dow average up 0.1 percent, the S&P 500 up 0.5 percent and the Nasdaq up 0.7 percent.
Shares of Exxon Mobil Corp
U.S. front-month crude futures rose 62 cents, or 1.02 percent, to settle at $61.67 a barrel on the New York Mercantile Exchange.
On Nasdaq, big-cap technology shares led the index lower. Apple Inc
Ratings agency Standard & Poor's rattled markets on Thursday when it said it might cut Britain's AAA credit rating because of the danger of soaring public debt, sparking fears of a similar action against the United States.
With the long Memorial Day holiday weekend approaching, volume was light on the New York Stock Exchange, adding to the session's volatility. U.S. financial markets will be closed on Monday for the holiday.
On the New York Stock Exchange, about 1.06 billion shares changed hands, sharply below last year's daily average of 1.49 billion. On the Nasdaq, about 1.62 billion shares traded, also well below last year's daily average of 2.28 billion.
Although both the Dow and the S&P 500 ended Friday's session slightly lower, the market's breadth was moderately positive. On the NYSE, there were 1,524 advancers and 1,458 decliners. On the Nasdaq, though, the opposite was true, with 1,458 stocks declining and 1,185 stocks advancing.
(Additional reporting by Ellis Mnyandu; Editing by Jan Paschal)